Anil Ambani to take 'appropriate steps' after SEBI's ban
Business magnate Anil Ambani is currently assessing a recent order from the Securities and Exchange Board of India (SEBI), which has barred him from the capital markets for five years. A representative for Ambani confirmed this development today. The spokesperson also stated, "Mr. Ambani is reviewing the final order dated August 22, 2024, passed by SEBI in the said matter, and will take appropriate next steps as legally advised."
Compliance with SEBI's interim order
The spokesperson further clarified that Ambani had stepped down from the boards of Reliance Infrastructure Ltd and Reliance Power Ltd. This decision was in response to SEBI's interim order issued on February 11, 2022, related to a case involving Reliance Home Finance Ltd (RHFL). The representative emphasized, "He is in compliance with the said interim order for the last two and half years."
Allegations and penalties against Ambani
SEBI has accused Ambani and 24 others of misappropriating funds, resulting in a five-year ban from the securities market that was issued on August 22. The regulatory body also imposed a penalty of ₹25 crore on Ambani for allegedly masterminding a plan to illegally divert funds from RHFL, a listed subsidiary of the Reliance Group. This prohibition restricts them from buying, selling or otherwise dealing in securities, directly or indirectly.
SEBI's additional sanctions and findings
In addition to the action against Ambani, SEBI has also banned RHFL from the securities market for six months and imposed a fine of ₹6 lakh. The regulator's investigation revealed that Ambani, with the help of key managerial personnel at RHFL, had created a fraudulent scheme to divert funds from the firm by disguising them as loans to entities associated with him.
SEBI's order highlights governance failure at RHFL
SEBI's order underscored a significant governance failure at RHFL, influenced by certain important managerial personnel under Ambani's control. The company management and promoter were criticized for their reckless approach in sanctioning substantial loans to entities with minimal assets, cash flow, net worth, or revenue. This led to most borrowers defaulting on their loan repayments, causing RHFL to fail in meeting its own debt obligations, and leaving public shareholders in a precarious situation.
Other entities fined by SEBI in RHFL case
SEBI has also imposed penalties on 24 other entities, including former key officials of RHFL - Amit Bapna, Ravindra Sudhalkar, and Pinkesh R Shah - for their involvement in the case. Ambani, Bapna, Sudhalkar, and Shah have been fined ₹25 crore, ₹27 crore, ₹26 crore and ₹21 crore respectively. The remaining entities including Reliance Unicorn Enterprises and others have each been fined ₹25 crore for either receiving the illegally obtained loans or facilitating the illegal diversion of funds from RHFL.
